20. April 2010 
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Development of shopping centres still declining to a low point in 2011
“There are a large number of shelved projects throughout Europe which could be reinitiated in the short term. For example, in the UK alone around 1.2 million sq m shopping centre space is currently on hold. When the economic environment improves and finance eases, such projects could boost the medium term pipeline significantly. Whilst there will be a delay before new schemes come on-stream, suggesting supply shortages in some markets over the next 2-3 years, investor interest in development is steadily re-awakening and the best schemes are unlikely to remain stalled for long.”
Charles Slater, partner and head of retail services Cushman & Wakefield Russia, said: “Despite the dramatic slowdown in development activity in Russia the pipeline continues to be robust and tops the table in terms of announced projects. Going forward there are positive forecasts for Russia’s economy this year and 2011. Market fundamentals point to a returning of the retailer occupational markets which will help fuel developer’s appetite to again push into the many untapped cities across the regions of Russia.”
Razvan Gheorghe, partner and managing director, Cushman & Wakefield Romania, said: “Job insecurity during 2009 in the private sector coupled with the 2010 Government layoff program did not help consumer confidence or boost spending or borrowing. This has therefore affected the development of new shopping centres. We believe that the upturn in development will take place only after improvement in the jobs market and after banks regain confidence in the real estate sector. In our opinion, 2010 will be a year of preparatory work for future developments, with completion timed in the years ahead when the Romanian economy should be in recovery mode.”
Katarzyna Michnikowska, Senior Analyst from Warsaw’s Cushman & Wakefield office, said: “With shopping centre GLA per 1,000 population standing at 173 sq.m, Poland is a bit below the European average in terms of space absorption. Following the record year of 2009, with 900,000 sq.m of GLA being absorbed as a result of shopping centre development boom, the market will face a notable drop in annual shopping centre completion levels between 2010-2011. However, retail investment market recovery observed in late 2009/early 2010 in Poland will help improve the availability of finance for a number of shelved projects. Considering the specific nature of development processes, the effects of this phenomenon should be seen after minimum two years. We expect it will translate into a significant rise in annual modern shopping centre provision from 2012.”
| European shopping centre pipeline | |||||||
| Rank 2009/10 | Country | 1,000 sq m | |||||
| 2/1 | Russia | 2,539 | |||||
| 1/2 | Turkey | 1,307 | |||||
| 5/3 | Italy | 1,006 | |||||
| 3/4 | France | 879 | |||||
| 9/5 | Bulgaria | 609 | |||||
| 6/6 | Spain | 605 | |||||
| 4/7 | Poland | 539 | |||||
| 13/8 | UK | 498 | |||||
| 8/9 | Germany | 481 | |||||
| 7/10 | Romania | 418 | |||||
Charles Slater, partner and head of retail services Cushman & Wakefield Russia, said: “Despite the dramatic slowdown in development activity in Russia the pipeline continues to be robust and tops the table in terms of announced projects. Going forward there are positive forecasts for Russia’s economy this year and 2011. Market fundamentals point to a returning of the retailer occupational markets which will help fuel developer’s appetite to again push into the many untapped cities across the regions of Russia.”
Razvan Gheorghe, partner and managing director, Cushman & Wakefield Romania, said: “Job insecurity during 2009 in the private sector coupled with the 2010 Government layoff program did not help consumer confidence or boost spending or borrowing. This has therefore affected the development of new shopping centres. We believe that the upturn in development will take place only after improvement in the jobs market and after banks regain confidence in the real estate sector. In our opinion, 2010 will be a year of preparatory work for future developments, with completion timed in the years ahead when the Romanian economy should be in recovery mode.”
Katarzyna Michnikowska, Senior Analyst from Warsaw’s Cushman & Wakefield office, said: “With shopping centre GLA per 1,000 population standing at 173 sq.m, Poland is a bit below the European average in terms of space absorption. Following the record year of 2009, with 900,000 sq.m of GLA being absorbed as a result of shopping centre development boom, the market will face a notable drop in annual shopping centre completion levels between 2010-2011. However, retail investment market recovery observed in late 2009/early 2010 in Poland will help improve the availability of finance for a number of shelved projects. Considering the specific nature of development processes, the effects of this phenomenon should be seen after minimum two years. We expect it will translate into a significant rise in annual modern shopping centre provision from 2012.”
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